Phase I: 

Vertical Axis Baseline Clothes 

Washer Manufacturing Cost 

Assessment 

Presentation to 

Department of Energy 

Workshop 

March 11-12, 1998 

\. 

Arthur D. Little, Inc. 

Acorn Park 

Cambridge, Massachusetts 

02140-2390 

(617) 498-5000 

Reference 
I 

Clothes Washer Manufacturing Cost Assessment Phased Program 

The program was divided into two phases to provide for stakeholder 

review and comments. 

-

Phase I \ 

-----~ 

Provide a detailed and objective cost estimate of 

two state-of-the-art, high volume, vertical axis 

clothes washer for further analysis 

Develop a differential cost estimate for a 

proprietary vertical axis design and for two 

commercially available horizon-ta! axis designs 

23814/dV3/51981SM 1 
•) 

... , 

Clothes Washer Manufacturing Cost Assessment Phase I Objectives 

Phase I focused on developing the methodology and baseline cost for 

stakeholder review. 

• Develop a clear and consistent manufacturing cost assessment 

methodology for clothes washers 

• Provide a detailed manufacturing cost of a high production volume 

"typical" clothes washer for a baseline estimate 

• Report the results of the analysis in a way that preserves confidentiality of 

data 

• Obtain input from all stakeholders as to the validity of the methodology 

and on the "reasonableness" of the baseline manufacturing cost 

estimates 

23814/dV3/5/98/SM 2 
Clothes Washer Manufacturing Cost Assessment Program Plan 

The Phase I program is complete and we have initiated a cost 

assessment of the prototype V-axis washer. 

Task 1: Tear Down of Baseline Vertical Axis 

Clothes Washers 

Task 2: Manufacturing Cost Estimate 

Task 3: Stakeholder Review of Cost Estimate 

and Production Facility Review 

Task 4: Final Report 

- -- - -- -- - Phase II - ' 

--------~~· - ~ 

Task 1: Construct a BOM for Horizontal Axis 

Design (2) 

Task 2: Construct a BOM for Whirlpool 

Prototype 

Task 3: Manufacturing Cost Estimates 

Task 4: Review Manufacturing Cost Estimates 

and Processes with stakeholders 

Task 5: Revise Manufacturing Cost Estimates 

Task 6: Final Report 

,A Meetings 

+Report 

23814/dl/3/5/98/SM 3 
Manufacturing Cost Assessment Methodology Technical Cost Modeling Process 

The cost assessment approach is very effective in comparing 

competing design approaches or processes because the structure is 

independent of the product or process. 

Product Specifications 

Part Weight, Size, Count (teardown) 

Production Volume 

(Industry Analysis) 

Material and Component Database 

Cost, Dens ... 

Colded Rolled Steel 

304 Stainiess Steel 

Polypropylene 

Process Database 

Equipment Cost, 

Depreciation Life ... 

Large Press 

Injection Molding 

Powder Coating 

Financial Factors 

Output per Day 

Work Days per Year 

Wages 

Equipment Uptime 

Component1 

Materials 

Assembly Labor 

Equip. Utilization 

Indirect Materials 

2 

3 

rials 

rials 

Full Production Cost 

Summary 

Direct Materials 

Direct Labor 

Overhead 

Indirect Materials 

Indirect Labor 

Equipment + Bldg. 

Depreciation 

Maintenance 

Utilities 

Truces and Insurance 

23814/dV31519BISM 4 
_, ·~ 

Manufacturing Cost Assessment Methodology Structured Bill of Materials 

From the physical teardown we create a product specification which is 

represented by a structured bill of materials. 

v OD or Avg Max Proj Weight (lbs) Scrap Material 

1.00 Tub & Basket Assembly ? #I Width Thknss Thknss Length Area Steel I Other % Cost,$ 

Part 

No. Description CateQorv 

1.01 Tub Plastic 1 22.5 0.08 0.235 22.5 377.72743 co:·zf :;;:;. 5.520 '<:i'.41iJjg; $1.77 

1.03 Water Level Box Plastic 1 2.75 0.08 0.14 1.75 5.9395736 :::;;;i't :c:, 0.066 ;:::;;;;~KV $0.02 

1.02 Tub to 9.JSPeOsion Seal Rubber 1 2.6 0.15 0.32 1.225 2.4740042 ;;:.::EC l'i·i:'. 0.066 . ::::izifi!:i' $0.10 

1.07 Bleadl tube Rubber 1 2.6 0.08 0.25 3.6 2.34 .·.:::t3 ''.ii"' 0.036 1.:·:::;;:;:>: $0.05 

1.30 Basket Assv 

1.20 Basket I Enamld Steel 1 I 20.5 0.055 I·',·. :'',':·"'":·.:t 18 297.05722 13.500 li''':i': J:i"'"I 15% $3.29 

1.22 Lint O:illector Plastic 1 I 13.5 0.075 0.215 4 128.82493 t:C-:'.,i<;;:j 0.475 1:0! ::::t. ·::1 $0.15 

1.21 Basket Balancing Ring wN/ater in tt Plastic 1 20.5 0.08 0.25 2 107.33597 P'''''''' ., 'H 1.400 .:· ; '''.";<:! $0.45 

1.49 Unner Aaltator Assv 

1.50A Fabric Disoenser - Top Plastic 1 3.81 0.1 0.125 1.6 10.260826 .\;::, :' 0.108 ::,·;.·;?,·>';', $0.03 

1.508 Fabric Disoenser - Olp Plastic 1 3 0.06 0.175 5.5 7.0685830 k>:''.> ':~ 0.074 i'::;.::.':7:i':: $0.02 

1.50C Fabric Disoenser - Bottom Plastic 1 4 0.065 0.28 5 12.566371 1::•:,i.» 0.148 ):.::;;::;!;:· $0.05 

1.51 autch O:iwr Plastic 1 3.25 0.075 0.075 0.9 8.2957681 I''.>::.> 0.030 i~~: :i'J:Jx $0.01 

1.52 autch O:iwr Seal Rubber 1 3.15 0.16 0.16 1.5029379 !'''. :··:.!]·' J 0.010 ' .':' :1,:;;:r;, $0.02 

1.75 LaNer Aaltator Assv 

1.60 Bottom Agitator E!Ming Plastic 1 2.95 0.175 0.175 0.26 2.4975662 : . .ff,/;;:1' 0,016 :;;,;;;;;::; W.01 

1.59 Bottom AQitator Plastic 1 13.5 0.15 U.15 13 143.13882 >.;c'i •. 'oe:W 1.816 !1:-;t:t:;,;:; $0.58 

1.58 Uoneritower AQitator Bearing Plastic 1 2.6 0.045 0.125 0.775 2.7646015 ,'/h·: ' 0.016 :S':1"::·;:'·:·:. $0.01 

1.57 Uooer Aattator Plastic 1 3.75 0.15 0.325 11.5 57.5 ;,.: :~·:,, . 0.934 ;-;,;;.·.:·" $0.30 

1.85 Aaltator Clutch Assv .· 0:''f;:i''.'i!i5

1fl'C:!' '.:;:l:.::tr:;:~;,!'.' ;''H.v·:,•: ;,<;,,,: :, '-' ·~''2\::·:: ~.'~'--:-.<:'.· ·:: .. ;,;"'1(: ':"'·'·: JC~.:· 00:'0 ::;: ,:::;.: ·;::.' i, ,''.-;,: ··'.:~·:. •:· :: ;: .,, : :::::'.'(.:?,:'';~';' 

1.85 Aaltator Clutch Assv 

1.56 au1ch Rnnv Plastic I 1 2.82 0.08 0.125 2.265 5.6212203 k'"::; : . 0.052 1.:,c:': .. :<:I $0.02 

1.55 Ratchet Stoos Plastic I 4 0.4 0.16 0.2 0.9 0.24 I :::: . . :.>:' 0.016 I ',::»'':.':'.:I $0.01 

1.54 au1ch Bottom Cover Plastic I 1 2.41 0.05 0.065 0.4 1.21171231 ,: / '' 0.006 : : ·1 $0.00 

Sub-Totals 22 13.50 10.79 $6.89 

Combining the BOM with the· materials and component's database we 

estimate the materials cost of the product. 

23814/dV315198/SM 5 
Manufacturing Cost Assessment Methodology Fabrication Process Cycle Times 

We estimate the fabrication process cycle times per component from 

the teardown analysis and the process database. 

Whirlpool Model# LSR7233EQO I Manufacturing 

Powder Enamel Large lie cl um Small Brake Cut& 

1.00 Tub & Basket Assembly Axturing Wash Coating Baking Preu Press Press Form Shear 

Part 

No. Descrlption 

1.01 Tub 10.0 1.0 

1.03 Water Level Box 5.0 

1.02 Tub to SusnP.nsion Seal 

1.07 Bleach tube 

1.30 BasketAssv 

1.20 Basket 40.0 I 5.0 I 10.0 I 30.0 2.0 

1.22 Lint Collector I I 

1.211 Basket Balancina Rina wfNater in tt 5.0 I I I l I 

1.49 Un""r Aaitator A""" 

1.50A Fabric D"""'nser -TOD 

1.508 Fabric Disoenser - CUD 

1.50C Fabric Di<:nAnser - Bottom 

1.51 Clutch Cover 

1.52 Clutch Cover Seal 

1.75 Lower Aaltator Assv 

1.60 Bottom Aattator Bearing 2.000 

1.59 Bottom Acttator 

1.58 UnnAr/lower Aattator Bearina 

1.57 Urn:"'r Aattator 

1.85 Aaltator Cluti:h Assv 

1.85 Aaltator Cluti:h Assv 

1.56 Clutch Body 

1.55 Ratchet Stoos 

1.54 Clutch Bottom Cover 

Sub-Totals 62.0 5.0 10.0 30.0 3.0 

!. • .. •; "" '.1',,'l>' ,0:, ,;:>11 ,,,~ •.. ~r 

.. ·" ''··· ·.·"' ,, .. ~· .. ··' .'_,_,,,..;,·,c-, _;; .;,.,; '(,; /._<_ ; .. c ...... ·. '· • .. ' '. ., ,; { ,~- d' ':)A.·.;,,;:_(', 

23814/dl/3/5/98/SM 

11 

;~-

' i 

i 

j 

j 

' ' I< 

1: 

... 

" L 

L 

6 
 • 

Manufacturing Cost Assessment Methodology Fabrication Equipment and Labor Estimates 

Summing the process cycle times we can estimate the equipment and 

labor requirements. 

r - -- -~ • -· .-.. 

·~~ -· ---·-. " 

RMder' EnilTEI Lage Mdlltl Smll Bae at& 

Fix1ui1YJ 'MEil OBIYJ BM!YJ Ress Ress Ress Fam Sm' ~ . \.QAA Ui:l 135.0 15.2 15.2 5.0 34.0 6l5 38.0 57.0 105.5 

#d DSird Pats~ QB-aim a>.OO 22.00 22.00 1.00 6.00 21.00 ~.00 a>.OO 38.00 

#Tcta Ei:μpTBt R;q.taJ 14 2 2 1 4 8 5 6 11 

~Eflvktine 1.00 200 7.00 7.00 1.00 1.00 1.00 1.00 0.00 

Pdua IQlracrs Rq.mj 14 4 14 7 6 8 5 6 6 

apprst £lvalaicn (MN(ea") $101 SD.13 $1.~ $2.(6 SD.62 SD.fil SD.CB socs SD.17 

Tcta 8Jjprst OH (MvS) ~.11 $2.00 $2100 $32.00 ~.00 5819 $1.2'2 snoo $2.64 

MmiasOBIU"it ($) 0.2 5.6 3.7 6.8 6.4 1.9 ., ; ~; "' "' #~-''-~''-1' ;;, .w •. ,.; 'J'."J~. : '.'°>. \,l>'.U,'.·. _.:i '""''"'' 

Combining the equipment and labor requirements for the processes 

with the process database and financial factors determines the direct 

labor, and overhead costs of the product. 

23814/dV3/5/98/SM 7 
Phase I Key Assumptions Product Specifications 

Two vertical axis clothes washers were selected for teardown analysis. 

Baseline Clothes Washer Characteristics: 

• 27" overall width 

• 3 wash/rinse temperature settings 

• Unheated rinse 

• 3 Settings for load size 

• 2 wash/spin speeds 

• 8 or more wash cycles 

• Super capacity wash basket 

23814/dV3/5198/SM 8 
., -•I 

Phase I Key Assumptions Manufacturing Facility Assumptions 

A "typical practices" clothes washer manufacturing facility was 

developed for the baseline manufacturing cost assessment. 

Baseline Clothes Washer Manufacturing Facility: 

• Production volume of 1.5 million units per year 

• 100 percent capacity utilization 

• All non-dedicated equipment 

• "Greenfield" investment 

• A relatively high degree of automation in major fabrication processes 

(painting, stamping, welding) · 

• Manual final assembly 

• Typical industry equipment costs, process cycle times and labor content 

23814/dV3/519BISM 9 
Phase I Key Assumptions Manufacturing Cost Conventions 

Our analysis estimates the full production or factory cost segmented 

by direct labor, materials and factory overhead. 

Full Production Cost 1 Non-Production Cost 

r:-~r-:,...:_,-zj;:"5r:<~<~ /!'.~~;>;-: 

I 

Mkt: .:a~rcn', '. ~ '"""' ; ~.,." J < 

, AdV - 1 ·>' ;-;:,:::;1 

I 

'"-,'-') 

i Lo < •i 

! - War .. ·. ustrig. ·I 

\ - Def!¥~o// · .. ·. 

' - ·Recore! 

1

1 

.... · keai?1~9 . . ... . j ~· drci~i1entiYr' . : 

l--~~~~~~~~-j 

r Geq~rat;i ·.· i corJ)orat~ ·· i costs • 

I ~- comp. 13tc .. I ', i 

L-----~-----' 

., ,. . ., 1 

n eres · .. 1 

L_ -~~~-1 

Costs· 

• associalE!d 

• with effi>rts I ! ··•F-.!, 

1 to tlf;!!'.f;n~w; 

: or iQ'lptovE!d ! produdfS or .. 

; produ~tion 

processes, 

: ' compfiance c6de .. ···•··•· : 

\ · Modemiz8tion I '. ... -·-- ·-· - ·---~--'----1 

,..-;--~--:::--. 

1

cdsts < i lor: •.. ·.•·· r ·.· .. ! 

l .. b_orro. . wjng l 

funds·· I 

' l__. ___ _j 

1 Tax Refonn Act of 1986, essentially, requires companies to measure cost of goods sold as the full production cost of the goods sold. 

23814/dV315198/SM 10 
" 

Phase I Key Assumptions Manufacturing Financial Factors 

The financial factors are based on general industry practices 

Work Days per Year 240 days 

Shifts per day 2.5 shifts 

Runtime per Shift 8 hrs 

Lot Size 3 work days 

Equipment Uptime 90% 

Assembly Downtime 

Wages $24 per hour 

Capital Recovery Rate 

Equipment Depreciation Life 14 years 

Maintenance 4 % of Equipment Cost 

Utilities 1 . 7% of Materials Cost 

Taxes 0.9°/o of Factory Cost 

Insurance 0.8% of Factory Cost 

238141dV3/51981SM 11 
,, 

V-Axis Baseline Manufacturing Cost Segmented by Key Sub-assemblies 

The aggregated manufacturing cost of the baseline v-axis clothes 

washer is $203.51. 

Tub & Basket $12.37 $5.90 $10.06 $28.34 

Transmission/Motor $37.88 $6.89 $9.97 $54.74 

Suspension $4.32 $2.40 $3.10 $9.82 

Pumps, Controls, and $27.93 $2.63 $3.25 $33.81 

Valves 

Cabinet $21.83 $7.08 $14.27 $43.18 

Misc. & Final Assembly $22.29 $6.59 $4.74 $33.61 

.. 

.Total $126.63 $31.48 $45.40 '. . $203;5,1, . < 

, '• 

23814/dl/3/5/98/SM 12 
V-Axis Baseline Manufacturing Cost Overhead Cost Breakdown 

Based on the financial factors and product teardown the factory 

overhead is 22o/o of the full production cost. 

I ii -- --

Cost Category I Cost Basis I I i 

I I 

Indirect Labor $11.71 Teardown and industry analysis 

Indirect Materials $19.07 Teardown analysis 

Maintenance $2.57 4.0o/o of total capital investment 

Utilities $2.48 1 . 7°/o of material costs 

Depreciation $6.11 Teardown analysis 

Taxes $1.83 0.9°/o of full production cost ... 

Insurance $1.63 . 0.8% of full production cost 

Total $45.40 

23814/dV3/5/981SM 13 
., 

V-Axis Baseline Manufacturing Cost Investment 

Based on a greenfield site the aggregated fixed cost (equipment, 

tooling and building) is $176 million. 

Tub & Basket $42 $35 $77 

Transmission/Motor $16 $13 $29 

Suspension $5 $4 $9 

Pumps, Controls, $3 $2 $5 

and Valves 

Cabinet $25 $21 $46 

Misc. & Final Assembly $5 $4 $10 

Totals $96:million . $BO rnilli~n .. $t7S milllon '•· 

23814/dV3/5198/SM 14 
.. 

Variability and Uncertainty in Costs Key Parameters 

To better understand the impact of variability and uncertainty in the 

cost estimate we conducted sensitivitiy analysis and Monte Carlo 

simulations on several parameters. 

Labor Rate Uniform $17 to $28 per hour 

Plant Output Triangular 900,000 to 1.5 million 1.5 million 

Equipment Depreciation Uniform 7 to 15 Life 

Total Investment Triangular 50°/o to 150°/o 100°/o Multiplier 

Maintenance Uniform 2.5% to 5.5°/o 4°/o • ~.F1 

~-

Equipment Uptime Triangular 70°/o to 95°/o 90o/o 

Utilities Triangular 1% to 3.5% 1.7°/o 

23814/dV315198/SM 15 
Variability and Uncertainty in Costs Labor Rate 

Sensitivity analysis on labor rate (baseline = $24/hr) indicates an 

impact of approximately + or - 5 percent. 

$210.00 

Z" $205.00 

c 

:I 

~ ..... 

... 

GI 

i $200.00 

~ 

0 

'lii 

0 

(.) $195.00 

$190.00 

17 19 21 23 

Cost of Labor ($/hr) 

25 27 

23814/dV3/5198/SM 1 6 
Variability and Uncertainty in Costs Actual Plant Output 

Sensitivity analysis on actual plant output {baseline = 1.5 million/year) 

indicates an impact of approximately + or - 1.4 percent. 

$211.00 

$210.00 

$209.00 

--·2 -::I 0 $208.00 ........ 

... 

Q) 

.s= 

= $207.00 

3: 

... 

Q) 

a. $206.00 

iii 

0 

0 

$205.00 

$204.00 

$203.00 

$202.00 -1------+------+-------l----+-----+-------f 

900,000 1,000,000 1,100,000 1,200,000 1,300,000 1,400,000 1,500,000 

Actual Output (Washers per Vear) 

23814/dV3/5/9BISM 17 
. ' 

Variability and Uncertainty in Costs Equipment Depreciation Life 

Sensitivity analysis on equipment depreciation life (baseline = 14 

years) indicates an impact of approximately+ or - 2.3 percent. 

$210.00 

$209.00 

$208.00 

.-. $207.00 

·2 

-:::s 

~ 

-= $206.00 GI 

~ 

I/I 

IU 

== 

- $205.00 

0 

-I/I 

0 

0 $204.00 

$203.00 

$202.00 

$201.00 

7 8 9 10 II 12 13 14 15 

Average Depreciation Life (years) 

238141dV3/5/981SM 1 8 
Variability and Uncertainty in Costs Total Investment 

Sensitivity analysis on total investment {baseline= $176 million) 

indicates an impact of approximately + or - 2.2 percent. 

$208.00 

:::- $206.00 ·2 

:II 

0 

....... 

... 

Cl> 

s: 

= $204.00 

3: 

... 

Cl> 

Cl. 

-Ill 

8 $202.00 

$200.00 

50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% 

Investment Factor (multiplying estimated equipment investment) 

23814/dV3/SJ98/SM 19 
' . 

Variability and Uncertainty in Costs Maintenance Cost 

Sensitivity analysis on maintenance cost {baseline = 4o/o) indicates an 

impact of approximately + or - 1 percent. 

$206.50 

$206.00 

$205.50 

$205.00 

--- $204.50 ·c: 

:II 

Cit 

....... lii $204.00 

s:. 

Cl) 

Ill 

3: $203.50 

-0 

-

Cl) 

0 $203.00 

0 

$202.50 

$202.00 

$201.50 

$201.00 

2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 

Maintenance as % of Depreciation 

23814/dV3/5/981$M 20 
I. - ) 

Variability and Uncertainty in Costs Equipment Uptime 

Sensitivity analysis on equipment uptime (baseline = 90o/o) indicates 

an impact of approximately + or - 0.9 percent. 

$206.00 

$205.50 

...... $205.00 

·c: -:I 

0 

':' $204.50 Cl) 

s= 

Ill 

Ill 

3:: $204.00 

0 

;; 

0 

CJ $203.50 

$203.00 

$202.50 

70% 75% 80% 85% 95% 

Uptime(%) 

23814/dV3/5198/SM 21 
L - t 

Variability and Uncertainty in Costs Utilities Cost 

Sensitivity analysis on utility costs {baseline= 1.7%) indicates an 

impact of approximately+ or -1.8 percent. 

........ 

c -:I 

$207.00 

$206.00 

~ $205.00 ... 

GI 

.s::. 

II) 

~ 0 $204.00 

0 

0 

0 

$203.00 

$202.00 

s201.oo-l-------+------+-------+---------i1-------t 

1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 

Utility Cost as % of Final Cost 

23814/dV3/5198/SM 22 
.• 

4) -·· ~· 

Variability and Uncertainty in Costs Monte Carlo Simulation 

Monte Carlo simulation of these seven key parameters together 

indicates with 95% certainty a cost variation between $197 and $232 

for the aggregated baseline. · 

1,000 Trials 

Forecast: Aggregated Cost 

Frequency Chart 2 Outliers 

.031 .--~~~~~~~~~~~~~~~~~~~~~- 31 

~ 

·--·-

.023 

.Cl .016 

= .Cl 

Q 

..... 

c.. .008 

.000 

$180.00 $197.50 $215.00 

............................. ·- 23.2 

-ri 

..... 

C"'D ............................ - 15.5 -= 

$232.50 

c 

C"'D 

................ - 7.75 ~ = 

I - 0 

$250.00 

Certainty is 95.30% from $196.10 to $237.17 $ 

238141dV31519BISM 23 
Clothes Washer Manufacturing Cost Assessment Phase I Results 

Phase I provides a consistant methodology and aggregated baseline 

cost for stakeholder review. 

• A clear and consistent manufacturing cost assessment methodology for 

future cost analysis of higher efficiency designs 

• A baseline manufacturing cost of $203 for a high production volume 

"typical" clothes washer 

• An aggregated baseline cost estimate of two vertical axis clothes washers 

without revealing specific manufacturer's designs. 

23814/dV3/51981SM 2 4